With Clock Ticking on Government Shutdown, Fiscal Stalemate Continues

By Billy House

July 31, 2013

President Obama’s tense relations with congressional Republicans did not appear to be eased by his “grand bargain” offer Tuesday to cut corporate tax rates in return for the government being able to invest more in programs to generate middle-class jobs.

They shot down the proposal even before it was officially announced.

So don’t expect matters to get any chummier on Wednesday, when Obama holds his “Democrats only” meetings with House and Senate lawmakers at the Capitol.

And is huddling privately with Democrats -- and not meeting also with Republicans -- the best way to soothe nerves? Will this kick-start negotiations on a host of important legislative business, not the least of which is how to keep government running after Sept. 30 without any annual spending bills yet passed?

“The president of the United States has a responsibility, and I think [he] is talking to Republicans,” said House Minority Whip Steny Hoyer, D-Md., noting there have been ongoing discussions between Obama and some GOP senators.

But, Hoyer added, “Speaker [John] Boehner has indicated he is really not willing -- he is not too interested -- in talking to the president. I am not sure who I would talk to on the Republican side right now if I thought there was a way forward to get something done.”

So, as things now stand, the president is to meet behind closed doors with Democrats only (starting at 10 a.m. on the House side, and then an hour later with the Senate) to talk and strategize about their own agenda, before members start their annual August break at the end of the week.

Topics are expected to range from immigration reform to concerns about the nation’s domestic surveillance programs, as well as the party’s messaging strategies during the recess.

But the more urgent discussion undoubtedly will focus on what happens right after Congress gets back from its break. Just nine scheduled legislative days will remain before Republicans and Democrats face a potential government shutdown. Unless, that is, they can somehow agree on a short-term funding bill before the start of the new fiscal year on Oct. 1.

And then there looms a showdown over increasing the nation’s debt ceiling.

But if the manner in which Republicans on Tuesday tore apart Obama’s grand-bargain proposal in a speech in Chattanooga, Tenn., as less than genuine is any indication, any deal-making is still very far off.

Obama had cast his offer to reform (that is, cut) corporate tax rates in return for a Republican pledge to open up significant new investments in creating middle-class jobs as “a framework that might help break through the political logjam in Washington.”

That plan would represent a departure from positions by both the president and Republicans that corporate tax reform be passed alongside reform to taxes on individuals. Republicans especially have emphasized that some small-business owners file taxes as individuals. Obama’s proposal would reduce corporate rates from 35 percent to 28 percent or below 25 percent for manufacturing.

But even before his speech -- as details of what Obama planned to announce were leaked out -- Republicans wasted no time in attacking it.

“We have always been opposed to corporate-only tax reform,” said a senior House Republican aide. “The White House knows that is our position. Dealing with corporate taxes separately is the opposite of a concession to us.” The same aide also noted it has always been the GOP position that the corporate side of tax reform should be “revenue neutral.” But, he said, “Now they want to raise tens of billions of dollars in additional revenue through corporate reform. Again, that’s the opposite of a concession.”

Boehner spokesman Michael Steel had a similar reaction. “The president has always supported corporate tax reform. Republicans want to help families and small businesses, too.… This proposal allows President Obama to support President Obama’s position on taxes and President Obama’s position on spending, while leaving small businesses and American families behind.”

Senate Majority Leader Harry Reid, D-Nev., had a far different take.

“Today we saw proof that Republicans judge policies by one simple, sad rule. If the president wants it or proposed it, they oppose it,” he said. “President Obama proposed a thoughtful approach to tax reform—corporate tax reform, policies that Republicans have said should be done. Because Obama came out with it, they’re opposed to it.”

But a McConnell aide noted that the senator sticks by a previous comment: “This president’s a good campaigner. We all recognize that. But, at some point, campaign season has to end, and the working-with-others season has to begin.”